Group insured, advised clients better off

A joint-project on life insurance claims and disputes has revealed group insured and advised clients are better off when it comes to life policies.

Just the second publication to use the full data set from ASIC and APRA's initiative since its launch in March, the latest iteration covers the rolling 12-month period from 1 January 2018 to  31 December 2018.

It found admittance rates for individual advised clients were generally higher than for those without an adviser.

Advised client death claims were admitted on 96% of occasions, while non-advised death claims sat at 88%. Similarly, total permanent disability admittance rates came in at 87% for advised clients, and just 59% for those without an adviser.

Trauma admittance rates were even, with both channels registering 87%, but the trend returned when it came to disability income protection, with advised clients having claims admitted in 95% of cases, and non-advised clients coming in at 85%.

Accident cover saw individual non-advised register 82% admittance, with just 19% for advised clients.

However, group insurance was the top performer, scoring 98% admittance for death claims, 88% for TPD and 96% for disability income insurance, topping the pile across all three cover types.

APRA's report said advisers could add value for policy holders by setting clear expectations about what they're covered for, partially explaining the higher admittance rates.

"Generally, individual advised business shows higher admittance rates than individual non-advised for the same cover type," APRA said.

"This could be due to the policyholder having clearer expectations up front of what is covered by the product, or (related to the previous point) the adviser discouraging the policyholder from lodging a claim that is not covered by the policy."

The numbers read similar when it comes to the claims paid ratio, the dollar amount of claims paid out in the year as a percentage of the premiums receivable in that time.

Advised clients were better off than those without an adviser when it came to death cover (39%-32%), TPD (45%-28%) and trauma (62%-40%), but underperformed in disability income protection (66%-85%) and accident (25%-51%).

However, group super again came out on top in its three cover types, with a 78% claims paid ratio for death cover, 71% for TPD and 104% in disability income insurance.

Read more: APRATPDAccidentLife insuranceASIC
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